Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $490,350 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider's book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider's fair and book valu differences as follows: Computer software Equipment client contracts In-process research and development Notes payable Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts Goodwill At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses). Total assets Accounts payable Notes payable Common stock Book Values Fair Values $ 45,500 74,500 $ 86,700 60,000 121,000 30,750 (95,400) (104,000) Additional pald-in capital Retained earnings Total liabilities and equities Pratt 0 0 14,050 S 108,500 176,000 490,350 244,000 617,500 379,000 Prepare a consolidater halance sheet for Pratt and Spider 14,400 64,500 73,800 0 45,500 153,000 74,500 $ 2,029,400 $ 425,700 S (95,900) $ (54,800) (530,500) (95,400) (380,000) (100,000) (170,000) (25,000) (853,000) (150,500) $(2,029,400) S (425,700)
Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $490,350 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider's book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider's fair and book valu differences as follows: Computer software Equipment client contracts In-process research and development Notes payable Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts Goodwill At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses). Total assets Accounts payable Notes payable Common stock Book Values Fair Values $ 45,500 74,500 $ 86,700 60,000 121,000 30,750 (95,400) (104,000) Additional pald-in capital Retained earnings Total liabilities and equities Pratt 0 0 14,050 S 108,500 176,000 490,350 244,000 617,500 379,000 Prepare a consolidater halance sheet for Pratt and Spider 14,400 64,500 73,800 0 45,500 153,000 74,500 $ 2,029,400 $ 425,700 S (95,900) $ (54,800) (530,500) (95,400) (380,000) (100,000) (170,000) (25,000) (853,000) (150,500) $(2,029,400) S (425,700)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $490,350 cash. Pratt will operate
Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider's book values
approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally
developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider's fair and book value
differences as follows:
Computer software
Equipment
client contracts
In-process research and development
Notes payable
Cash
At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses):
Receivables
Inventory
Investment in Spider
Computer software
Buildings (net)
Equipment (net)
Client contracts
Goodwill
Total assets
Accounts payable
Notes payable
Common stock
Book Values Fair Values
$ 45,500 $ 86,700
74,500 60,000
121,000
30,750
(95,400) (104,000)
Additional paid-in capital
Retained earnings
Total liabilities and equities
Pratt.
0
0
14,050
108,500
176,000
490,350
244,000
617,500
379,000
Prepare a consolidater halanes cheat for Dratt and Cri
Spider
14,400
64,500
73,800
0
45,500
155,000
74,500
0
$2,029,400 $425,700
$(95,900) S (54,800)
(530,500)
(95,400)
(380,000)
(170,000)
(853,000)
$(2,029,400)
(100,000)
(25,000)
(150,500)
$ (425,700)
Transcribed Image Text:Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2021.
Cash
Receivables
Inventory
Investment in Spider
Computer software
Buildings (net)
Equipment (net)
Client contracts
Research and development asset
Goodwill
Total assets
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities
PRATT COMPANY AND SUBSIDIARY
Worksheet for a Consolidated Balance Sheet
$
Pratt
$
December 31, 2021
Spider
14.050
108.500
176.000
490 350
244,000
617.500
379.000
S 2.029,400
S (95.900)
(530,500)
(380,000)
(170,000)
(853,000)
(2029 400)
Answer is not complete.
$
11355
14,400
64,500
73.800
45,500
153,000
74 500
S425 700
(54.800)
(95.400)
(100.000)
(25,000)
(150,500)
$(425/700)
$
Debit
41.200
121.000
30,750
192.950 S
Credit
490 350
14.500
504,850
S
Consolidated
28,450
173,000
249,800
0
330,700
770.500
439.000
121,000
30,750
2,143,200
0
00000000
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